Income Inequality Essay

Custom StudentMr.
TeacherENG
1001-04
20 February 2017

Income Inequality

Inequality exists around us. One of the inequalities is the income received by a person or member of a family. Income inequality refers to the various incomes within a given population. This income includes wages, salaries, pensions, and interest derived from the assets. The economy nowadays is very dynamic and is constantly growing, but the top is absorbing the biggest portion of the growth. As Arthur Okun once said: “Inequality is the price America pays for a dynamic, efficient economy; we may not like it, but the alternatives are worse. As long as the bottom and the middle are moving up, there is no reason to mind if the top is moving up faster, except perhaps for an ideological grudge against the rich—what conservatives call the politics of envy” {NationalJournal}.

This kind of inequality is especially large in the United States. In the States there are four social classes: the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. A high percentage of all citizens’ work in a service related job. These types of jobs pay far less than the manufacturing jobs that dominated the American economy. With the present economy looking bad, most employers are cutting down on employees and possibly replacing them with lower paying or part-time employees. “…Office towers of trademark American companies on both coasts were facing outward, using cheap labor and lax regulations across the world to make strong profits, which flowed to the top corporate officers at twice the rate of even the 1990s” {Suskind 89}.

The competition between people for the job is high in the United States and that gives a chance for the employers to lower the wages. Globalization is another actor in the inequality growth. “Globalization has had an impact, as rich countries have been sending more of their commodifiable, generally less-skilled jobs offshore, which has displaced many lower-paid workers in rich countries” {Economix}. The recent globalization wave had also allowed millions of low-wage workers from around the world to compete for the job positions in United States.

“The basic story is that globalization has integrated a huge labor force of billions of workers in developing countries into the world economy. These workers are able to fill many of the jobs that used to provide middle class living standards to workers in the United States and will accept a fraction of the wage. This makes many formerly middle class jobs uncompetitive in the world economy given current wages and currency values” {Al Jazeera}. Those workers have to be payed a lot less so the employers are likely to choose those low-wage workers over the Americans who are expecting to be played a lot more. Although some say that most immigrants lack the skills to compete with a bulk of native workers.

The upper classes have the most of the power in the nation and use their influence and wealth to convert the United States income into benefiting their well-being and financial stability. In the last fifteen years, the income of the upper classes has risen gradually, while the income of the lower classes had risen slightly, further showing the inequality that exists in our nation. It is usually difficult for the lower classes to achieve financial success because a high-income job requires good education, which the lower classes lack, because they cannot afford it.

The digital revolution that has happened in the recent years also plays a significant role in the growth of inequality. The digitalization has allowed the machines to replace many forms of human labor, thus getting rid of some of the lower income jobs. The economists also say that the future technological advancement will also displace the vast majority of high skilled workers like doctors, lawyers so that will lower the inequality gap in the future.

The rise of income inequality in the developed world is driven by a number of factors. The economy in America is very dynamic and is always growing and the higher class of people mainly consumes the growth. The costs of healthcare have risen, thus employers have less many for wages.

Globalization is playing an important role in the growth of inequality as wealthy countries send the low- wage jobs to the countries with cheaper labor force and the immigrants that are coming in to the country are getting all the jobs that provided living for the middle class workers in America. The digitalization is also causing inequality as the machines are taking over all those lower income jobs. But the future development of digitalization will displace a large number of skilled workers thus decreasing the inequality.